Thoughts from our Global Emerging Markets Team – Emerging Markets Dividend Investing

At Fiera Capital, our highly experienced emerging markets equity Portfolio Managers established the Fiera Capital Emerging Markets Income and Growth Strategy (Strategy) over 11 years ago, as a sub set of traditional active management focused on global emerging market equities. In the first quarter of 2021, the Strategy has appreciated by +7.6% versus a +6.5% increase for the MSCI Emerging Markets Index. This brings the outperformance over the last 12 months to +5.2% (all data in gross euros). The approach to dividend investing in emerging markets employed by the Strategy is not simply to buy a basket of the highest yielding stocks, but to find stocks not only yielding above average dividends, but for those dividends to rise over time. This requirement for compounding dividends leads us to higher quality companies with growth which is attractive and predictable.

A more detailed look at performance, can be seen from the following 20‐year charts. There have been strong periods of outperformance of this style, almost entirely negated by the events of the last 12 months. The COVID‐19 pandemic saw hypergrowth digital assets, nearly all of which pay zero or minimal dividends, vastly outperform as investors sought safety in online businesses perceived to benefit from lockdowns and the work from home trend. At the other end of the scale many more traditional businesses, with operations grounded in the offline world, saw severe disruption which temporarily disrupted their earnings power.

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